Dear Delegate,

Governance is one if the most topical issues in central banking.

Operational independence, as well as the introduction of stringent new corporate governance standards for private-sector firms, has focused attention on how central banks and other public-sector institutions are run.

At the same time, the IMF and other international watchdogs, including credit rating agencies, are paying ever-closer attention to governance in central banks.

The tasks performed by the board are crucial to an institution’s overall performance and its standing at home as well as in the international community.

Properly structured and briefed, a governing board will provide valuable support to the governor or president, as well as discharging its responsibilities in determining the organisation’s strategies, oversight of risk management and the efficient use of resources.

Indeed, although practice differs greatly from one country to another, these responsibilities may extend to every aspect of managing the central bank’s affairs, including monetary policy procedures. But central banks have become increasingly technical and specialised institutions and so to be effective, boards must focus their efforts and ask the right questions.

This seminar from Central Banking Publications is designed to equip members of governing and supervisory boards, including non-executive directors, to perform their oversight role as effectively as possible. It is intended specifically to be useful for individuals who now sit on, support or interact with governing boards or who may be called upon to do so in future. 

The benefits are clear. When central bank board members are fully equipped to support governors and presidents, and fully effective in their constructive scrutiny of management and strategy, the overall performance of the institution is greatly enhanced.

Each day of the seminar follows a key theme:

Day 1: Improving Governance

This introductory day explores how central banks can respond to the demands that independence and increased scrutiny place on governance standards by setting clear business objectives and strategies.   

Day 2: Managing Relations with External Stakeholders: New Challenges
The greater focus on good governance has brought with it two sets of challenges in managing external relations. Firstly, communications with government, markets and the public have fundamentally altered in the age of independence. Secondly, more than ever, central banks finances are under the microscope. Institutions must manage capital and efficiently allocate resources or else face severe criticism. These sessions will address the new challenges.

Day 3: Case Studies in Central Bank Governance Change
Through considering responses to a variety of scenarios, these sessions will examine how, as a board, delegates might approach real-life dilemmas which confront central bank boards. Case studies will cover issues such as transparency, achieving lasting institutional change and governance in emerging markets. Delegates will be encouraged to share particular concerns that they have encountered or expect to encounter in their day-to-day work. 

Day 4: How the Board Adds Value
By pulling together ideas generated over the preceding three days, the final day looks at where governing and supervisory boards should direct their efforts to achieve maximum results.

All discussions are held in roundtable format to encourage participants to share with each other their experiences and debate issues at the forefront of their field. Each session of the seminar allows participants an opportunity to “benchmark” their work against best practice internationally.

Since 1999, over 1,400 senior central bankers and supervisors have attended roundtable seminars hosted by Central Banking Publications. I hope you will be able to join them.

I look forward to welcoming you to Windsor.

Yours sincerely,

Robert Pringle,
Managing Director, Central Banking Publications

Sunday, 6th April

Registration and Welcoming Dinner

Monday, 7th April

Improving Governance
Chairman: John Mendzela

Introduction: What is governance and why is it important?
Lars Heikensten
Former Governor, Sveriges Riksbank

The attention paid to good governance is growing. The Sarbanes-Oxley Act, International Financial Reporting Standards, the European Union’s single capital market legislation and a host of related national initiatives have radically altered the governance climate for the private-sector. Added to this are new requirements and expectations for public sector bodies.  Increasingly, commercial banks, auditors and independent board members expect to see these new standards reflected in central banks’ own procedures. What are the key lessons for central banks to draw? Where are these new standards most (and least) appropriate?

Central bank boards: choosing the optimal model
Speaker to be confirmed

While central bank autonomy and accountability are now accepted as good practice, less consensus exists on how to structure governing bodies of central banks. Though country specific factors must often be considered, there are certain fundamental issues that all central banks must address. This session discusses these issues and suggests ways in which they should be taken into account in order to create the optimal central bank board.

Operation of the board: committees, procedures and the chairman
Mark Jewett
Corporate Secretary, Bank of Canada

For central banks, as for all large and complex organisations, effective and appropriate governance procedures are an indispensable element of institutional efficiency and effectiveness. Unlike commercial sector organisations however, central banks lack a ready-made template for governance. This session examines how a leading central bank has structured its governance, looking in particular at the role of an audit committee, the procedures for appointing external auditors and approving general accounting principles, the roles and remits of other key committee (including those responsible for remuneration and succession planning) and the preparation and approval of the annual report.

Key issues for participants
John Mendzela

This session will draw together and build on ideas discussed earlier in the day. Participants will be asked to talk about the steps they have taken to improve governance standards and the obstacles which they have come across in their bid to do so. From this discussion, delegates will be asked to formulate a list of key objectives that they wish to achieve in order to further improve standards at their member institutions.

Tuesday, 8th April

Managing Relations With External Stakeholders: New Challenges
Chairman: John Mendzela

The relationship between the central bank and government
Michael Foot
Former Executive Director, Bank of England

As the shareholder, it is the government to whom central banks and regulators are ultimately accountable. However, increasing institutional independence, which is largely credited for lowering inflation over the last two decades, has fundamentally altered the relationship between central bank and owner. Yet it remains essential for both sides that a productive and constructive relationship remains. In the age of autonomy, how should the dialogue be maintained and managed? 

Communicating with markets and the public
Don Brash
Former Governor, Reserve Bank of New Zealand

The recent global financial turmoil has revealed that, for central banks, getting the message across is almost as important as the message itself. The advent of inflation targeting has also meant that so-called “black box” explanations of policymaking are no longer acceptable on a day-to-day basis either. Practitioners and observes increasingly recognise that actions that may solve problems in theory may not have the desired impact in reality if their purpose is not clearly signalled to markets and the public alike. But less consensus exists on what sort of communication strategy works best. This session will highlight the impact of good communication and explore best practice for delegates’ member institutions. 

The central bank as a bank – managing capital
John Nugée
Director and Head of Official Institutions Group, State Street Global Advisors, former Head of Reserve Management, Bank of England

Modern central banks are primarily policymaking institutions. However, they remain banks, and so are exposed to many of the same balance sheet risks that banks face. For this reason, effective financial controls and modern risk management techniques are crucial. Board members must fully understand these risks and should endorse the central bank’s approach to managing them. This session examines balance sheet risks and how the board should review the adequacy of risk management. Discussions will also focus on the question of a central bank’s need for capital and what constitutes an adequate amount. 

Reviewing effectiveness and efficiency
Gilles Noblet
Counsellor to the President, European Central Bank

Supervising the efficient use of resources is a core task for central bank boards. Granted a national monopoly, central banks must be able to show prudent stewardship of the resources entrusted to them. In the current environment of reduced central bank earnings, governments, parliaments, the media and the public are understandably keen to know that their central bank is operating efficiently. This session explores some of the ways in which the European Central Bank has tackled this issue, and examines how central banks can best communicate and disseminate information about their performance. 

Wednesday, 9th April

Case Studies in Central Bank Governance Change
Chairman: John Mendzela,

The New Zealand experience – a case for transparency
Don Brash
Former Governor, Reserve Bank of New Zealand
During Don Brash’s 14-year term as governor of the Reserve Bank of New Zealand, parliament passed an act that was then unique, and today is still quite unusual, which fundamentally changed the relationship between government and central bank. The key ingredient of the act was, and is, transparency – of an agreed inflation target, of the governor’s actions and of the governor’s performance. Here the former governor discusses the benefits of the central bank breaking new ground in the field of governance.

Independence and accountability
Irakli Managadze
Senior Policy Adviser, European Bank for Reconstruction and Development, and Former Governor, National Bank of Georgia

Economic upheavals and fast-paced change in transition countries have meant central banks have had to adapt quickly to new economic and institutional realities. In this session, Irakli Managadze, a former governor of the National Bank of Georgia, draws on his experience of leading that institution to discuss how challenges of independence and accountability can be met in practice.

Monitoring and improving productivity
Anthero de Moraes Meirelles
Deputy Governor, Central Bank of Brazil

As institutions strive to improve efficiency, a crucial element in this process is having management data in place to monitor performance. This session, looks at how the Central Bank of Brazil implemented and developed its system for assessing internal performance and the lessons other central banks can learn from the process.

Thursday, 10th April

How the Board Adds Value
Chairman: John Mendzela,

Summary session: key issues in governing the 21st century central bank
John Mendzela

Building on the themes raised throughout the week, this session looks at where governing and supervisory boards should direct their efforts to add greatest value. Should they drive the strategy of the central bank, or follow a more hands-off scrutinising approach?  Which things need direct attention and which can be delegated?  What information should boards expect to receive?

Participant issues and action plans
Discussion session led by John Mendzela

This final discussion session will aim to maximise the practical benefit of the week's key themes and issues. Participants will identify and discuss how the experiences and ideas from earlier sessions could be specifically applied to their own institution's challenges.